Food inflation declined sharply to 11.05 per cent for the week ended February 5 from 13.07 per cent in the previous week, mainly owing to cheaper pulses and a moderation in onion prices even as the kitchen staple remained over 31 per cent dearer on a yearly basis.
Commenting on the marked fall by 2.02 percentage points in inflation numbers as per the Wholesale Price Index (WPI) data, a delighted Finance Minister Pranab Mukherjee asserted that the rate of rise in food prices would come down to single digit.
Mr. Mukherjee pointed out that even more importantly, not only had food article inflation fallen, but actual food prices had fallen substantially with the index going down to 182.9 from 186.9 in the previous week. “... in quite some time, food inflation will also be under single digit,” he said while noting that this “should result in overall inflation figures going down, even if not over the next two to three weeks, but over the next one or two months.”
At a time when vegetables should have been cheaper, food inflation not only ruled firm in double digits during the last two months but also crossed 18 per cent in the last week of 2010 owing to high prices of greens. On an annual basis, overall vegetables remained about 24 per cent dearer during the week mainly owing to higher prices of onions as compared to the previous year. However, potatoes turned cheaper by 13.63 per cent.
Even as Planning Commission Deputy Chairman Montek Singh Ahluwalia expects the declining trend in food inflation to continue, other analysts are of the view that the WPI numbers would remain in double digits during the whole of February despite a further fall in vegetable prices. The basis for this apprehension is that even though prices have come down as compared to the previous week, the average rate of food inflation is still high at 17 per cent on a yearly basis.